SBC,
Inc., appeals, and William A. Cutler III, as personal
representative of the estate of William A. Cutler, Jr. (the
estate), cross-appeals, from an order of the district court
for Douglas County, which order denied SBC's request to
pierce the corporate veil of Related Investments, Inc., and
hold the estate liable for a judgment previously entered
against Related Investments. SBC also appeals from the
district court's order which awarded the estate
approximately $140,000 in attorney [23 Neb.App. 941] fees.
For the reasons set forth herein, we affirm the district
court's decision denying SBC's request to pierce the
corporate veil of Related Investments. However,

Page 49

we reverse the court's order awarding the estate any
attorney fees.

II.
BACKGROUND

1.Procedural History

In May
2007, the district court for Douglas County entered a
judgment in the amount of $159,822.14 against Related
Investments and in favor of SBC. This judgment relates to a
promissory note that was signed by H. Michael Cutler
(Michael) personally and as vice president of Related
Investments. The promissory note provided that Michael owed a
little over $150,000 to Sherrets & Boecker LLC. Michael
defaulted on timely paying the amount due under the
promissory note. Ultimately, Sherrets & Boecker assigned its
interest in the promissory note to SBC.

In July
2007, approximately 2 months after the judgment was entered
against Related Investments, SBC filed a complaint against
Michael and William A. Cutler, Jr. (William). William was
Michael's father. The complaint sought to pierce the
corporate veil of Related Investments to hold Michael and
William personally liable for the May 2007 judgment. The
complaint alleged that Michael and William were the "
shareholders, principals, and alter egos of" Related
Investments.

While
the action was pending in district court, both Michael and
William died. Subsequent to their deaths, SBC filed a motion
to revive the action against the estate, and the district
court granted this motion. No action was taken against
Michael's estate.

On
April 17, 2012, SBC filed an amended complaint against the
estate. In the amended complaint, SBC asserted that the court
should pierce the corporate veil of Related Investments to
hold the estate liable for the May 2007 judgment, because
William was a " shareholder, principal, and alter
ego" of Related Investments and because William "
disregarded corporate [23 Neb.App. 942] formalities and the
corporate form, . . . exercised complete dominion and control
over the entity, and [had] interests . . . that . . . were
wholly intertwined and one and the same" as Related
Investments.

The
estate filed an answer to the amended complaint on May 3,
2012. In the answer, the estate raised various affirmative
defenses to SBC's claims, including that the claim was
barred by the doctrine of unclean hands and by equitable
estoppel.

On
September 4, 2012, SBC filed a motion for summary judgment,
which the district court denied. The case then proceeded to a
bench trial in August and September 2013.

2.Factual Background

The
events which gave rise to this appeal began in 2006, when
Michael became involved in litigation involving a certain
piece of real property located in Omaha, Nebraska. Sherrets &
Boecker represented Michael during this litigation. In fact,
Sherrets & Boecker had been Michael's attorneys for an
extended period of time and, at the time of the 2006
litigation, Michael owed the firm a little over $100,000 in
past-due legal fees.

The
2006 litigation ended when Michael and the other parties
involved entered into a settlement agreement. This settlement
agreement included a $310,000 payment to Michael and an
option to buy certain real property at a reduced price.
Related Investments was created and incorporated in
conjunction with this settlement agreement for the purpose of
acting on the option to purchase the real property. Evidence
presented at trial revealed that Michael and William attended
a meeting with an accountant in December 2006 concerning the
incorporation of Related Investments.

Page 50

After this meeting, articles of incorporation were filed with
the Secretary of State, but no other corporate documents were
ever signed or finalized. On December 5, the option agreement
was signed by William, as president of Related Investments.
Of the $310,000 [23 Neb.App. 943] in settlement proceeds
received by Michael, $10,000 went toward securing the option
to buy the real estate.

After
the $10,000 in settlement proceeds was paid to secure the
option agreement, Michael had paid Sherrets & Boecker a total
of $155,000, or 50 percent of the original proceeds, pursuant
to his agreement with the firm. How the remaining $145,000 in
settlement proceeds was disbursed was disputed at trial.

SBC
presented evidence to demonstrate that Sherrets & Boecker
should have received this money as payment for previous legal
fees owed by Michael. However, Sherrets & Boecker decided to
loan this money to Related Investments so that at least
$100,000 could be put into an escrow account to help secure
the financing to act on the option agreement. As a part of
Sherrets & Boecker's agreement to loan Related
Investments the remaining $145,000 in settlement proceeds,
...

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